Country Focus: Iran

by Melissa Alexander
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Iran enjoys a very diverse climate, enabling the country to produce a wide range of products. The main crops are grains, such as wheat, rice and barley. Special programs initiated in the agricultural sector have allowed Iran to become self-sufficient in the production of some fruits, vegetables and livestock, but the country remains a net importer of foodstuffs.

In the past decade or so, the government has placed a high priority on improving productivity. The focus of the government’s first Five-Year Development Plan (1990-1995) was liberalization of production and marketing, which helped increase the agriculture sector’s growth rate 8.8% per year in that period.

During the second plan (1996-2000), the government maintained its guaranteed purchase of agricultural products at high prices. It also continued to allocate foreign exchange at a preferential rate for the import of agricultural machinery and to grant loans with attractive terms and low interest rates to farmers through state-owned organizations.

The third Five-Year Development Plan that began in March 2000 aims to increase job opportunities through diversification of agriculture, to develop agricultural exports and to improve irrigation, particularly in water management and distribution systems.

In addition to these long-range plans, a number of specific agricultural programs have been ongoing. Among these, the rural cooperative development program is one of the most ambitious and highly successful.

This program includes the consolidation of small farmlands and farm equipment to enable greater efficiency in the use of technology and the reduction of production costs. Generally, each cooperative covered by this program has 250 members and consists of 2,500 hectares of farmland.

The aim is to develop 700 cooperatives covering a total farmland area of 2 million ha. Apart from increasing farming efficiency, the development of the rural cooperatives on such a large scale enables greater purchasing power to acquire technology and modern equipment.

Iran’s second important ongoing program is the "Pivotal Wheat" scheme, which is coupled to the cooperative development. This program was designed to increase mechanization of farming practices, improve parent seed supply and generally increase production. Over the years, this program has received credit for helping Iran increase its wheat production by nearly 100% between 1980 and the late 1990s.

Official agricultural involvement also includes the Government Trading Corporation, which imports and subsidizes major foodstuffs including wheat, sugar, edible oil, rice and fertilizer. The GTC, affiliated with the Ministry of Commerce, delivers the imported commodities to relevant groups, called "recipient organizations," for distribution.

The GTC’s pur-chasing and distribution activities lead to a turnover of some U.S.$2 billion a year. It is headed by a board of directors, whose chairman is the managing director of the company; the purchasing committee, which comprises representatives of the ministries of commerce, economics and finance and foreign affairs; the Administration and Planning Organization; the Central Bank of the Islamic Republic of Iran; and representatives from each recipient organization. The Iranian parliament also closely monitors GTC activities through its three representatives who attend the GTC’s twice-weekly sessions.

Barley and maize are imported through the State Livestock Affairs Logistics Company and are not subsidized, as their major use is for animal feed.

In 2001, the agriculture ministry formed its first non-governmental organization, the National Association for Supporting Rice. Rice is a traditional food in Iran.

The rice NGO is designed to implement the government’s socio-economic commitments to generate employment, promote sustainable agriculture and improve farm incomes in this traditional sector. Specifically, the NASR is charged with improving productivity, collecting data, helping to develop processing facilities and promoting commercial enterprises for domestic use and export markets.


Wheat use in Iran has been increasing steadily, and per capita consumption, at 239 kg in 1998, is among the world’s highest. In comparison, per capita wheat consumption is about 70 kg in North America. Iran’s large variety of wheat-based food products is a big factor in high consumption levels, according to U.S. Wheat Associates. The more than 200 rollermills, plus numerous stone mills, produce four basic types of flour.

One is a specialized flour used for making confectioneries and pasta and accounts for about 5% of total use. The second flour is used for European-style breads and other manufactured products and accounts for about 25% to 30% of the total flour consumed.

Iran’s most popular flour is used in making "Sangak" bread and accounts for about 45% of flour consumption. The balance is milled on stone mills at close to whole wheat extraction rates and is used for Iran’s traditional flat bread.

The popular Sangak bread is a mild sourdough type that is fermented and then cooked on hot stones. This bread, which has a very short shelf life, has very high moisture content (about 110% absorption) and is fermented for 1.5 hours using dough from the previous day.

Flour milling is considered one of the oldest industries in Iran and continues to undergo modernization. Under a specific labor law, flour millers in the various provinces were permitted to establish separate associations, which eventually came together to form the Federation of Iranian Associations of Flour Milling. The pooling of the 15 groups was designed to unify and strengthen the industry’s voice.

Another industry organization is the Self-sufficiency and Research Center for flour milling, established by the Ministry of Industries and Mines. The center conducts extensive research and development programs on various milling and baking aspects, including wheat, production technology and equipment, marketing and flour quality. The center also periodically organizes seminars and expert committee meetings and publishes reports of its research findings.

Flour millers around the country also are shareholders in Research & Engineering Services, Inc., a company they formed fairly recently to provide technical and commercial support to the industry. The scope of the company’s activities includes a range of engineering work; commercial services, including importing and exporting of related equipment and parts; raw material handling; and flour exports.

Bread is heavily subsidized by the state, second only to fuel. A kilogram of flour costs the government 1,250 rials (about 72 U.S. cents), but bakers buy flour from the government at 40 rials per kilogram (2 cents).

In early to mid-2001, Iran faced a bread crisis. Iranian government officials at the time attributed much of the problem to a lack of professional training among bakers and unprofitablility in the sector.

For example, bakers tried to increase their output and returns by adding baking soda to the dough, but this lowered the bread’s protein content and quality. Moreover, about half the bread that was produced had to be destroyed.

Some of the government’s efforts to resolve the problems included providing funds for bread production and subsidies to specific groups of consumers. The government also announced plans to set standards for flour quality and bread varieties.

Iran imports about 30% of its wheat requirements. Although the cost of producing wheat is well above the cost of imports, Iran chooses to produce as much as possible to avoid dependence on other countries and to enhance food security.

Wheat production has steadily increased from 6 million tonnes during the 1979 Islamic Revolution to 1998’s record 12 million. But because of severe drought beginning in the 1999 season, Iran recently has become one of the world’s largest wheat importers.

Because the majority of wheat is used for human consumption, Iran purchases milling quality wheat, although generally not of the highest possible grade. Major suppliers are Canada, Australia, Europe and more recently, Kazakhstan.


Livestock accounts for about a quarter of Iran’s value-added agricultural production. Traditionally, migrating tribes have maintained large herds of sheep and goats, and most small farms have engaged in milk and meat production, but in recent years, the livestock industry has seen a move to larger-scale production in response to increasing meat demand.

In late 1999, Iran was estimated to produce 700,000 tonnes of red meat, 685,000 tonnes of chicken meat and 366,000 tonnes of other meat products. Iran is nearly self-sufficient in meat, but some imports are permitted to provide price stability.

Barley is the primary feed grain, with an average of 2.5 million to 3.0 million tonnes a year consumed for feed. Wheat feed use remains fairly constant at about 500,000 tonnes annually. Iran produces little maize, so expanding demand must be met through imports.

As with other agricultural sectors, Iran’s government is eager to see a more modern and productive feed industry. At a 2001 conference and exhibition in Tehran, a deputy agriculture minister noted that while feed manufacturers around the world generally drew on more than 15,000 components for feed making, Iran’s feed industry typically used only 20 components.

Aquaculture is another area that is ripe for further development in Iran. The production of farmed fish has expanded since 1985. Inland fisheries in 2001 comprised more than 1.5 million ha.

In 1996, fish production reached about 59,000 tonnes. Shrimp culture started in 1995, and in 1999 more than 2,000 ha were operational.